Telstra top is on horizon

ALTHOUGH Telstra ( TLS) has shifted from being shunned by investors to being tightly held, one has to wonder, is TLS near its top?

Firstly, the major attraction for investors has been TLS’s healthy fully franked dividends. Many investors have hung on through the ups and downs just to get the dividend.

Remember Sol Trujillo, ex CEO? If you are a long-term TLS shareholder that’s a name you’d probably rather forget, as he presided over a major decline in the TLS share price.

Since then, David Thodey has steered TLS through the hard times, with a focus on customer service, which was lacking for so long.

However, Mr Thodey will soon hand over the reins to Testra’s chief financial officer, Andrew Penn. I believe this move signals a pending top on the horizon for TLS.

Further, questions are being asked as to whether TLS should cut dividends and use the capital for growth, which raises a red flag if you are a long-term investor, as you may be looking elsewhere for a better return.

So what do we expect in the market?

After some big gains over recent weeks on the Australian market, one would be forgiven for thinking the party may soon be over.

In just five weeks we have seen the All Ordinaries Index put on around 8 per cent. Could there be more?

While the music may be slowing down, the band hasn’t finished. Although the market may pull back slightly, or trade sideways, over the coming weeks to test support below, there is still the potential for it to continue to trade much higher this year.

Supporting the recent rise, the Australian reporting season has been positive overall.

This week Fed chair Janet Yellen continued to convey an upbeat view on the US economy, which pushed American and European markets higher.

Also, news that China’s manufacturing sector has reportedly moved into expansionary territory has given the market a boost.

Will this continue? I believe it’s too early to tell, but this is something you ought to keep your eye on.

The real question to continue to consider is: with the cash rate so low and conditions in equity markets bullish, where else will investors put their money? Dale Gillham is chief analyst at Wealth Within.